Buy vs. Rent Annual Cash Flows

Copyright 1995, 2001, 2003, 2004, 2006 by Edward A. Chang
All rights reserved.

This analytical model was developed in connection with the personal finance bestseller, Get a Financial Life, and is available through my Spreadsheets page.

Buy vs. Rent Parameters page

Annual Cash Flows
Year 2003 2004 2005 2006 2007 2008
1 2 3 4 5 Sale Date
TAXABLE INCOME ADJ.
Points ($400) $0 $0 $0 $0 $0
Standard Tax Deduction $7,950 $8,189 $8,434 $8,687 $8,948 $0
Non-Prop. Itm. Ded. ($1,000) ($1,030) ($1,061) ($1,093) ($1,126) $0
Property Taxes ($1,100) ($1,133) ($1,167) ($1,202) ($1,238) $0
Interest ($4,573) ($4,512) ($4,448) ($4,380) ($4,308) $0
Total Tax. Inc. Adj. $0 $0 $0 $0 $0 $0
Tax Rate 27.0% 26.0% 26.0% 25.0% 25.0% 25.0%
TAX SAVINGS $0 $0 $0 $0 $0 $0
BEFORE-TAX BUY FLOWS
Down Payment ($20,000) $0 $0 $0 $0 $0
Points ($400) $0 $0 $0 $0 $0
Closing Costs (w/o pts.) ($4,000) $0 $0 $0 $0 $0
Property Taxes ($1,100) ($1,133) ($1,167) ($1,202) ($1,238) $0
Debt Service ($5,602) ($5,602) ($5,602) ($5,602) ($5,602) ($74,210)
Home Utilities ($1,800) ($1,854) ($1,910) ($1,967) ($2,026) $0
Home Maintenance ($1,250) ($1,288) ($1,326) ($1,366) ($1,407) $0
Home Insurance ($500) ($500) ($500) ($500) ($500) $0
Sale Proceeds $0 $0 $0 $0 $0 $121,665
Sale Costs $0 $0 $0 $0 $0 ($6,083)
AFTER-TAX BUY COSTS ($34,652) ($10,377) ($10,505) ($10,637) ($10,773) $41,372
APT. RENT & UTILS. ($9,600) ($9,888) ($10,185) ($10,490) ($10,805) $0
NET DIFFERENCE ($25,052) ($489) ($320) ($147) $32 $41,372
FUTURE VALUE ($29,971) ($565) ($357) ($158) $33 $41,372
PRESENT VALUE ($25,052) ($471) ($298) ($132) $27 $34,417
FV $10,354
PV $8,491

Buy vs. Rent Parameters page

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